AE-11039 ANALYSIS OF RETAIL TRENDS AND TAXABLE SALES FOR DURANT AND BRYAN COUNTY, OKLAHOMA Robert Bourne, Bryan County Extensionn Director, OSU, Durant (580) 924-53122 Jack Frye, Area Community Development Specialist, OSU, Ada (580) 332-41000 Lara Brooks, Extension Assistant, OSU, Stillwater (405) 744-4857 Dave Shideler, Extension Economist, OSU, Stillwater (405) 744-61700 OKLAHOMA A COOPERATIVE EXTENSION SERVICE OKLAHOMA STATE UNIVERSITY September 20111
Analysis of Retail Trends And Taxable Sales For Durant and Bryan County, Oklahoma Robert Bourne Jack Frye Bryan County Extension Director Area Ext. Comm. Dev. Specialist 1901 S 9th PO Box 1378 Durant, OK 74702-0749 314 S. Broadway, Suite 101 robert.bourne@okstate.edu Ada, OK 74821-1378 jack.frye@okstate.edu Lara Brooks Dave Shideler Extension Assistant Extension Economist 526 Ag Hall 323 Ag Hall Oklahoma State University Oklahoma State University Stillwater, OK 74078-6026 Stillwater, OK 74078-6026 lara.brooks@okstate.edu dave.shideler@okstate.edu ABSTRACT The goal of this paper is to provide an analysis of taxable sales for the community of Durant and Bryan County. Basic data is used to provide estimates of trade area capture and pull factors. Reported sales tax data is also used to analyze trends in the county and area. "Oklahoma State University, in compliance with Title VI and VII of the Civil Rights Act of 1964, Executive Order 11246 as amended, Title IX of the Education Amendments of 1972, Americans with Disabilities Act of 1990, and other federal laws and regulations, does not discriminate on the basis of race, color, national origin, sex, age, religion, disability, or status as a veteran in any of its policies, practices or procedures. This includes but is not limited to admissions, employment financial aid, and educational services." "Readers may make verbatim copies of this document for non-commercial purposes by any means." 1
ANALYSIS OF RETAIL TRENDS AND TAXABLE SALES FOR DURANT AND BRYAN COUNTY, OKLAHOMA INTRODUCTION Oklahoma communities have been concerned with all aspects of economic development for the past several years. Creating new jobs and additional income is of concern to rural communities and urban areas alike. Often, retailing is viewed as a "service" sector dependent on the "basic" sectors such as oil, manufacturing, and agriculture. Export sectors produce goods and services sold outside the local or regional economy. Service sectors tend to circulate existing local dollars rather than attracting "new" outside dollars. The retail sector is important, though, as retail activity reflects the general health of a local economy. Retail sales also produce sales tax dollars that support municipal service provision. Many local communities are promoting a "shop at home" campaign to keep local retail dollars in the community. It will not be possible to stop all out-of-town spending or sales leakage for a local economy. Opportunities for improvement do frequently exist, however. Key areas can be identified for improvement. Analysis of retail trends can identify emerging trade centers. Local leaders in Durant requested the following taxable sales analysis. The specific objectives of the study are: 1. Utilize reported sales tax data to analyze trends in the county and area. 2. Provide estimates of trade area capture and market attraction. 3. Provide estimates of market attraction, broken out by SIC code. 2
METHODOLOGY AND DATA SOURCES A trade area analysis model frequently used is "trade area capture." Trade area capture is calculated by dividing the city's retail sales by state per capita retail sales. The figure is adjusted by income differences between the state and relevant local area. The specific equation utilized is: TAC = RS PS Where: TAC c = trade area capture by city, RS c = retail sales by city, RS s = retail sales for the state, P s = state population, PCI c = per capita income by county, and PCI s = per capita income for the state. C Trade area capture figures incorporate both income and expenditure factors, which may be influencing retail trade trends. An underlying assumption of the trade area capture estimate is that local tastes and preferences are similar to that of the state as a whole. If a trade area capture estimate is larger than city population then two explanations are possible: 1) the city is attracting customers outside its boundaries, or 2) residents of the city are spending more than the state average. The trade area capture will fluctuate depending on how the community s retail sales and per capita income compare with the state s per capita retail sales and income. More specifically, the TAC for a community will increase when: 1. Retail sales in the community grow more quickly than per capita retail sales in the state; OR, 2. Per capita income of the community declines relative that of the state. Sometimes, both effects occur and reinforce one another; other times, one effect offsets the other. The overall movement of the TAC indicates which cause is dominant. For example, suppose TAC increases for a community, and it is known from Oklahoma Tax Commission data that retail sales increased. However, it is also known that per capita income increased relative to the state s per capita income rate. While an increase in per capita income is desirable, as it 3 S RS C X PCI PCI C S
indicates the potential for a higher quality of life for residents, it also means that fewer shoppers are needed locally to support the observed level of retail sales (and hence, a lower trade area capture number). Because the TAC increased, the increase in retail sales relative to statewide per capita sales must have been greater than the change in per capita income. Trade area capture figures can be utilized to estimate the amount of sales going to outside consumers. To do this, a pull factor, which is a measure of an economy's retail sales gap, is derived using trade area capture figures and city population: Where: PF c = city pull factor, and P c = city population. A pull factor of 1.0 means the city is drawing all its customers from within its boundaries but none from the outside. A pull factor of 1.50 means the city is drawing non-local customers equal to 50 percent of the city population. A pull factor of less than one means the city is not capturing the shoppers within its boundaries or they are spending relatively less than the state average. This is considered a leakage of retail sales or a retail sales gap. Additional discussion of trade area capture and pull factors can be found in the references cited in this report (Barta and Woods; Harris; Stone and McConnon; Hustedde, Shatter, and Pulver). The pull factor will increase from year to year either because of an increase in trade area capture (more people shopping in the community), or a decline in population (suggesting that more people from outside the community are needed to sustain the volume of sales implied by the TAC). The Oklahoma Cooperative Extension Service has been conducting pull factor/gap analysis and sales tax analysis since 1991 (Woods, 1991). PF C TAC = PC City pull factors and trade area capture figures are calculated for fiscal years 1980 through 2010. Data used were sales tax returns as reported by the Oklahoma Tax Commission. These figures include only taxable sales in an area, but they provide a proxy for all retail sales. C 4
Population data were obtained from the Oklahoma Department of Commerce and are consistent with figures from the 1980, 1990, 2000, and 2010 Census. Income figures were taken from the Bureau of Economic Analysis (BEA) estimates for counties. Similar income data for cities were not available, so county income was used as a proxy. IMPORTANT: Readers should note that BEA continually updates its estimates sometimes for all years back to 1969, which was the case with a recently released data set. These updates affect the values for trade area capture and pull factors. Because of this, trade area capture and pull factor values in this report may differ slightly from values previously published in older versions of this report. 5
TAXABLE SALES ANALYSIS Sales tax returns as reported by the Oklahoma Tax Commission for Durant are listed in Table 1 for the fiscal years 1980 to 2010. Sales tax returns are important to a city because they reflect the general health of a local economy and also represent significant revenue for the city budget. In FY 2010, Durant collected over $12.6 million in sales tax at a tax rate of 4.375%. This translates into nearly $289 million in retail sales. This is a decrease from 2009 when Durant collected over $13 million in sales tax collections at the same rate for 10 months of the year and 2 months at 3.75%, meaning over $310 million in retail sales. This is a common trend across the state for retail sales in FY2010. Sales are estimated from the sales tax returns and the sales tax rate that is reported. Figure 1 plots estimated taxable sales in both actual dollars and inflationadjusted dollars. The Consumer Price Index is used to adjust for inflation. When taxable sales have been adjusted for inflation, Figure 1 shows that real sales have increased overall since 1980. Since 2000, Durant has experienced nominal retail sales growth at an annualized rate of 5.5%, or 3.0% real retail sales growth since 2000. Real retail sales declined by 8.6% between 2009 and 2010. Table 2 lists trade area capture figures for Durant from 1980 to 2010. Durant s trade area capture has ranged from 19,541 in 1981 to 32,350 in 2010. This means that in 2010 Durant captured the retail sales of 32,350 persons. This is an increase from 2009 when Durant captured 31,141 shoppers. Even though Durant did experience a decline in retail sales, retail sales in the rest of the state declined at a higher rate. Therefore, Durant s TAC went up. Figure 2 presents a graphic of these same trade area capture figures. Table 2 also displays population figures for Durant from 1980 to 2010. Durant s population has overall increased since 1980. However, the 2010 Census population appears to be slightly lower than the estimates projected 6
in previous years. Durant s 2010 Census population is 15,856, while the 2009 population estimate for Durant was 16,877. Given that the 2009 population is a formula-driven estimate, knowledge of local events would be the best indicator of whether such significant population decline occurred or whether this discrepancy is an estimation error. The Census Bureau has released revised population estimates for counties between the 2000 and 2010 Censes, though they do not revise population estimates for sub-county geographies such as cities. Table 3 lists pull factors for Durant for the years 1980 to 2010. The pull factor for Durant ranges from 1.592 in 1983 to 2.040 in 2010. The interpretation is that Durant is capturing shoppers equal to 2.040 times the local population. Similar to the TAC, Durant s pull factor increased from 2009 to 2010. In addition to state sales decreasing at a larger rate, Durant s population had a decline of 1,021 people. Both of these factors can raise a pull factor even with a decline in retail sales from the previous year. Table 3 also shows pull factors for cities and towns in Bryan County with a reported sales tax. Figure 3 plots these pull factors. Mead currently posts the largest pull factor in Bryan County of 2.485. This is an increase from 2009 when Mead posted a pull factor of 1.747. Mead s current population is 122; towns with a lower population experience higher fluctuations in their pull factors, so a small change in population or retail activity can lead to large changes in pull factors. Mead s sales tax collections for FY 2010 equaled $54,137. Overall, this is a substantial increase from previous years. Bennington and Colbert follow with pull factors right below the 1.0 mark. Bennington s current pull factor of 0.904 is a decrease from 2009; Colbert s current pull factor of 0.737 is the highest pull factor they have reported since 2000. Bokchito, Caddo, and Calera follow with pull factors around the 0.50 mark. Bokchito and Caddo both experienced an increase in their pull factors from 2009 with current pull factors of 0.549 and 0.523, respectively. Calera experienced a slight decline in their pull factor to 0.456 in FY 2010. 7
Achille reported a pull factor above 0.20. Achille experienced an increase to 0.280. Kenefic follows with a current pull factor of 0.103. This is the highest pull factor Kenefic has reported since 2001. Figure 4 shows pull factors for 460+ cities that have sales tax return information available. The pull factors are presented as a group average by city size. The highest pull factors fall in the size categories 10,001 to 25,000 and 25,001 to 50,000 in population with the category of 5,000-10,000 close behind. The smallest pull factors fall in the range for cities less than 1,000 in population. Figure 5 plots Durant s pull factor compared to other cities with population of 10,000-25,000. Durant has consistently posted higher pull factors than the average of cities of similar size. 8
Table 1 Sales Tax Collections and Estimated Retail Sales for Durant, OK FY 1980-2010 Estimated Year Months Rate Sales Tax Collections Retail Sales 1980 12 3.0% $1,860,564.00 $62,018,800.00 1981 12 3.0% $2,053,149.00 $68,438,300.00 1982 12 3.0% $2,277,574.00 $75,919,133.33 1983 12 3.0% $2,434,809.00 $81,160,300.00 1984 12 3.0% $2,669,454.00 $88,981,800.00 1985 12 3.0% $2,783,949.00 $92,798,300.00 1986 12 3.0% $2,798,268.00 $93,275,600.00 1987 12 3.0% $3,002,249.00 $100,074,966.67 1988 12 3.0% $2,996,504.00 $99,883,466.67 1989 12 3.0% $3,041,164.00 $101,372,133.33 1990 12 3.0% $3,290,626.00 $109,687,533.33 1991 12 3.0% $3,564,806.00 $118,826,866.67 1992 12 3.0% $3,699,426.00 $123,314,200.00 1993 12 3.0% $3,802,972.00 $126,765,733.33 1994 12 3.0% $3,950,400.00 $131,680,000.00 1995 12 3.0% $4,058,681.00 $135,289,366.67 1996 12 3.0% $4,257,782.00 $141,926,066.67 1997 12 3.0% $4,432,148.00 $147,738,266.67 1998 12 3.0% $4,535,508.00 $151,183,600.00 1999 12 3.0% $4,831,663.00 $161,055,433.33 2000 12 3.0% $5,074,698.00 $169,156,600.00 2001 12 3.0% $5,329,163.00 $177,638,766.67 2002 12 3.0% $5,397,133.00 $179,904,433.33 2003 12 3.0% $6,120,371.00 $204,012,366.67 2004 8&4 3.0-3.25% $7,112,578.00 $230,692,653.85 2005 5&7 3.25-3.75% $8,160,814.00 $230,361,944.62 2006 12 3.0% $9,358,717.00 $249,565,786.67 2007 12 3.0% $10,149,312.00 $270,648,320.00 2008 12 3.0% $10,606,568.00 $282,841,813.33 2009 2&10 3.75-4.375% $13,256,866.00 $310,624,525.71 2010 12 4.375% $12,635,357.00 $288,808,160.00 Source: Oklahoma Tax Commission 9
Figure 1. Estimated Retail Sales for Durant, OK, FY 1980-2010: Actual and Inflation-Adjusted $350,000,000.00 $300,000,000.00 $250,000,000.00 $200,000,000.00 $150,000,000.00 $100,000,000.00 $50,000,000.00 $0.00 Actual Inflation-Adjusted 10
Table 2 Trade Area Capture Durant OK, in Bryan County 1980-2010 Year Trade Area Capture Population 1980 20,963 11,972 1981 19,541 12,250 1982 20,961 12,650 1983 20,856 13,100 1984 21,659 13,300 1985 22,455 13,450 1986 23,324 13,800 1987 25,622 13,600 1988 24,128 13,350 1989 23,743 13,500 1990 24,379 13,110 1991 25,259 13,005 1992 25,308 12,990 1993 25,406 13,093 1994 24,468 12,988 1995 24,079 13,050 1996 23,819 12,966 1997 24,281 13,051 1998 24,172 13,044 1999 24,324 12,992 2000 24,332 13,549 2001 23,502 14,105 2002 24,073 14,163 2003 27,595 14,344 2004 29,342 14,537 2005 28,225 14,637 2006 28,913 15,402 2007 30,011 15,947 2008 29,397 16,595 2009 31,141 16,877 2010 32,350 15,856 Values for 2010 should be considered preliminary since they rely on 2009 BEA data. 11
Figure 2. Trade Area Capture for Durant, OK, FY 1980-2010 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 12
Table 3 Pull Factors for Cities and Towns in Bryan County, FY 1980-2010 Year Durant Achille Bennington Bokchito Caddo Calera Kenefic Mead 1980 1.751 0.403 0.975 0.644 0.260 0.592 1981 1.595 0.306 0.809 0.539 0.245 0.511 1982 1.657 0.337 0.712 0.537 0.233 0.516 1983 1.592 0.311 0.530 0.530 0.253 0.544 1984 1.629 0.285 0.515 0.526 0.351 0.573 1985 1.670 0.380 0.738 0.568 0.302 0.519 1986 1.690 0.293 0.510 0.769 0.516 0.394 0.629 1987 1.884 0.402 0.593 0.796 0.521 0.357 0.621 1988 1.807 0.414 0.667 0.642 0.501 0.365 0.551 1989 1.759 0.448 0.694 0.631 0.525 0.337 0.590 1990 1.860 0.401 0.814 0.670 0.462 0.324 0.651 0.064 1991 1.942 0.422 0.794 0.760 0.392 0.362 0.760 0.119 1992 1.948 0.416 0.740 0.773 0.374 0.384 0.727 0.055 1993 1.940 0.319 0.613 0.877 0.382 0.398 0.656 0.083 1994 1.884 0.321 0.631 0.741 0.393 0.392 0.659 0.096 1995 1.845 0.320 0.614 0.678 0.426 0.425 0.633 0.149 1996 1.837 0.326 0.649 0.751 0.440 0.432 0.615 0.158 1997 1.861 0.368 0.618 0.778 0.429 0.478 0.895 0.182 1998 1.853 0.329 0.592 0.811 0.422 0.483 0.701 0.137 1999 1.872 0.358 0.518 0.730 0.396 0.453 0.708 0.138 2000 1.796 0.350 0.512 0.792 0.424 0.451 0.827 0.079 2001 1.666 0.354 0.544 0.678 0.468 0.326 0.605 0.105 2002 1.700 0.329 0.534 0.619 0.480 0.345 0.629 0.076 2003 1.924 0.344 0.568 0.615 0.642 0.259 0.685 0.052 2004 2.018 0.294 0.553 0.637 0.410 0.350 0.608 0.027 2005 1.928 0.264 0.513 0.610 0.405 0.380 0.647 0.053 2006 1.877 0.244 0.489 0.467 0.413 0.407 0.490 0.032 2007 1.882 0.269 0.490 0.459 0.421 0.447 0.515 0.027 2008 1.771 0.301 1.540 0.313 0.313 0.016 0.369 0.177 2009 1.845 0.329 1.465 0.305 0.318 0.048 0.377 0.164 2010 2.040 0.391 0.630 0.376 0.355 0.054 0.463 0.234 13
Figure 3. Pull Factors for Cities and Towns in Bryan County, FY 1980-2010 3.000 2.500 2.000 1.500 1.000 0.500 0.000 Durant Achille Bennington Bokchito Caddo Calera Colbert Kenefic Mead 14
1.6 Average Pull Factor by City Size, 1980-2010 1.4 1.2 1 0.8 0.6 0.4 0.2 0 Less than 1,000 1,000-5,000 5,000-10,000 10,000-25,000 25,000-50,000 Greater than 50,000 15
Figure 5. Pull Factors for Durant, OK and Other Towns with Population 10,000-25,000 2.500 2.000 1.500 1.000 0.500 0.000 Durant 10,000-25,000 16
SALES GAP ANALYSIS FOR DURANT, OK For purposes of this study, a sales gap analysis refers to a pull factor study that has been analyzed by SIC code for the 8 retail sectors. Sales gap coefficients may be interpreted in exactly the same manner as are pull factors. Gap coefficients and trade area capture values will also vary from previous years due to updated BEA and Census data. See Table 4 for Durant s sales gap analysis. Table 5 provides a detailed description of the 8 retail SIC categories. For Durant s Building and Gardening Materials (SIC 52), the number of shoppers has significantly increased since 2005. The highest TAC was recorded in 2010 of 40,034 shoppers. Durant s current gap coefficient (bottom half of Table 4) is 2.525. Therefore, in 2010, this sector captured the sales of a population equal to 2.525 times the local population. The category of General Merchandise (SIC 53) tends to be dominated by Wal-Mart. Wal-Mart reports all its sales under this category (even though it sells clothing, grocery items, etc. as well). In general, towns that have a Wal-Mart (especially a Wal-Mart Supercenter) will post sales gap coefficients that are greater than 1.0 for this category, and those that do not have a Wal-Mart will post sales gap coefficients that are less than 1.0. This trend does hold true in Durant. Durant has a Wal-Mart Supercenter. Moreover, their gap coefficient for this sector has been consistently around the 3.0 mark for the years displayed. Durant s current gap coefficient for this sector is 3.104 which translates into 49,217 shoppers for FY 2010. This is an increase from 2009 when Durant posted a gap coefficient of 2.827. Grocery stores (SIC 54) in Durant had a gap coefficient of 1.349 in 2010. Consumers tend to appreciate the convenience of shopping for groceries close to home; consequently, it is typical to find that even very small towns post high gap coefficients (over 1.0) for this sector. However, as stated earlier, Durant does have a Wal-Mart Supercenter that likely attracts many grocery shoppers. Therefore, 17
for the stores in Durant that solely sell groceries, they are attracting a population that is 1.349 times their local population. SIC category 55 is difficult to interpret because motor vehicle and gasoline sales are exempt from municipal sales tax in Oklahoma. Most of the sales tax collection reported under this category appears to stem from auto parts stores and other retail sales from gas stations. For instance, most gas stations sell snack items, tires, some auto parts, oil, anti-freeze, etc. Sales tax collections for Durant in this category indicate that these types of businesses attracted a number of shoppers equal to about 1.834 times the local population. This is the highest gap coefficient posted in this sector for the years displayed. Apparel sales are reported under SIC 56. Many small towns have nearly zero sales in this category, and it is common to see sales gap coefficients that are less than 0.10 in these towns. Cities with large malls tend to be the most successful at capturing the market. Durant does very well in this sector considering Durant s size. In 2010, Durant reported a sales gap coefficient of 1.678. This is an increase from 2009 when Durant posted a gap coefficient of 1.534. The highest gap coefficient for this sector was posted in 2005 with a coefficient of 2.093. SIC 57 reports Furniture and Home Furnishings. Also included are appliance and electronics stores, drapery and floor covering stores, and music stores. This category is often viewed from the perspective that many furniture purchases are made in either Tulsa or Oklahoma City or, in Durant s case, areas in north Texas. Oklahoma City, for example, has a large cluster of retail furniture stores centralized in one geographic area. Durant posted a gap coefficient of 1.338 in this sector for FY 2010. This is the highest gap coefficient for the years displayed. Eating and Drinking Places, SIC 58, is one of the most straightforward retail sectors. It contains restaurants and bars. Restaurants and bars in Durant captured 39,020 customers in FY 2010. 18
Restaurants in Durant tend to attract a number of shoppers that is equal to about 2.461 times the town s population. The sales gap coefficient for this sector has increased overall since 2006 with 2010 s gap coefficient being the largest for the years displayed. SIC 59, or Miscellaneous Retail, contains a host of retail activity, including pharmacies, florists, liquor stores, and antique stores. These are often the downtown or Main Street merchants. In 2010, Durant attracted 22,972 shoppers in this category for a gap coefficient of 1.449. This sector is the only sector that experienced a decline in Durant from 2009 to 2010. 19
Table 4 Retail Sales Gap Analysis by Standard Industrial Classification (SIC) Code for Durant, OK: Fiscal 2005-2010* FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 TRADE AREA CAPTURE Building, Gardening & Merchandise (52) 13,441 22,874 31,739 35,255 36,300 40,034 General Merchandise (53) 50,981 50,944 48,413 47,004 47,712 49,217 Food Stores (54) 15,492 17,511 16,638 15,198 18,134 21,388 Automobile Dealers & Gas Stations (55) 23,699 22,267 22,825 22,320 27,587 29,082 Apparel & Accessory Stores (56) 30,631 30,963 28,768 26,586 25,889 26,604 Furniture & Home Furnishings (57) 15,861 17,714 17,938 18,603 18,616 21,223 Eating & Drinking Places (58) 28,770 27,979 29,153 31,255 32,234 39,020 Miscellaneous Retail (59) 19,269 14,381 17,243 18,941 30,387 22,972 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 SALES GAP COEFFICIENT Building, Gardening & Merchandise (52) 0.918 1.485 1.990 2.124 2.151 2.525 General Merchandise (53) 3.483 3.308 3.036 2.832 2.827 3.104 Food Stores (54) 1.058 1.137 1.043 0.916 1.074 1.349 Automobile Dealers & Gas Stations (55) 1.619 1.446 1.431 1.345 1.635 1.834 Apparel & Accessory Stores (56) 2.093 2.010 1.804 1.602 1.534 1.678 Furniture & Home Furnishings (57) 1.084 1.150 1.125 1.121 1.103 1.338 Eating & Drinking Places (58) 1.966 1.817 1.828 1.883 1.910 2.461 Miscellaneous Retail (59) 1.316 0.934 1.081 1.141 1.801 1.449 * Trade area capture and gap coefficients can vary from previous years due to updated BEA and Census data available. For purposes of this paper, when analyzed by SIC code, the pull factor is referred to as the sales gap coefficient. 20
TABLE 5 TYPES OF BUSINESSES DESCRIBED BY THE RETAIL SIC CODES 52 Building Materials 58 Eating and Drinking Places Lumber yards including home centers Paint and wallpaper stores Glass stores 59 Miscellaneous Retail Hardware stores Drug and proprietary stores Retail Nurseries Liquor Stores Lawn and garden supply stores Mobile Home dealers 21 Used merchandise stores including antique stores and pawn shops Sporting goods stores 53 General Merchandise Stores Book stores Variety stores Stationary stores Department stores Jewelry stores Warehouse clubs Hobby, toy, and game shops General combination merchandise stores Camera and photographic supplies stores Gifts, novelties and souvenirs 54 Food Stores Luggage and leather goods stores Grocery stores (Supermarkets) Sewing, needlework, and piece goods stores Convenience stores both with and without gasoline Catalog and mail order sales (includes e- Meat and fish markets commerce stores) Fruit and vegetable markets Vending machine operators and direct selling Candy, nut and confectionery stores establishments Dairy stores Fuel oil dealers Retail Bakeries Bottled gas dealers Florists 55 Automotive Dealers and Gasoline Service Stations Tobacco Stores Motor vehicle dealers (new and used) Tire stores Auto supply stores Gasoline stations Boat dealers RV dealers Motorcycle dealers 56 Apparel and Accessory Stores Men and boys apparel Women s apparel and accessories Children and infant s wear Family apparel Shoe stores Custom tailor and seamstresses 57 Furniture and Home Furnishings Stores Furniture stores Floor covering stores Drapery, curtains and upholstery stores Pottery and crafts made and sold on site Household appliance stores Radio and TV and consumer electronics stores Computer and computer software stores Record and prerecorded tapes stores Musical instruments stores. Newsstands Optical goods stores Cosmetic stores Pet and pet supply stores Hearing aid and artificial limb stores Art dealers Telephone and typewriter stores
BUSINESS DEVELOPMENT STRATEGIES Retail trade trends reflect the overall health of a local economy. All out shopping or sales leakage cannot be stopped. Often, larger economic trends (State-National-Global) overwhelm retail opportunities. There are programs and actions that can assist retail trade activities, however. Concerned leaders and business persons can focus on business development by forming a business assistance committee to begin implementing some of the assistance activities or working with the existing chamber of commerce. The following activities are part of a retail trade improvement program. These activities can improve the climate for business and show the community's commitment to support local business. 1. Analyze the local business sector to identify needs and opportunities to be pursued by the program. Businesses often do not have the resources to study the economy (local, regional, and national) and how they fit in. They need practical data and analysis that will help in their individual business decision-making. In particular, economic analysis can identify voids in the local or regional market that can possibly be filled by expanding or new businesses. Examples of analysis include the pull factor analysis reported here, threshold analysis, and consumer surveys to identify needs and opportunities. In addition to economic analysis, information is needed on the needs or problems of individual businesses and of the business district as a whole. As needs are identified, action can be taken to improve the situation. For example, a business may need help in preparing a business plan to qualify for financing. Perhaps the appearance of buildings and vacant lots is detrimental to attracting people to the business district, or perhaps poorly coordinated store hours are a hindrance. Once these needs are identified, a business development 22
program can initiate action. A periodic survey of local business needs can form the basis of a business development program's work plan. 2. Provide management assistance and counseling to improve the efficiency and profitability of local businesses. Many local businesses are owner-operated, earn low profits, and have difficulty in obtaining financing. Businessmen often need additional education and training in improving business management skills like accounting, finance, planning, marketing, customer relations, merchandising, personnel management, or tax procedures. This assistance and counseling can be provided through seminars and one-to-one aid. Sources of assistance include the Service Corps of Retired Executives (SCORE), Small Business Development Center programs sponsored by the Small Business Administration, universities, technology centers, Oklahoma Department of Commerce, and the Cooperative Extension Service. The intent is to aid small businesses in becoming more competitive. 3. Assist new business start-up and entrepreneurial activity by analyzing potential markets and local skills and matching entrepreneurs with technical and financial resources. Establishing a business incubator is another way to assist new businesses. An incubator is a building with shed space or service requirements that reduce start-up costs for new businesses. Incubators have been successful in many locations but are not the right answer for every town. A successful incubator must have long-range planning, specific goals, and good management in order to identify markets and entrepreneurs. 4. Promote the development of home-based enterprises. Home-based work by individuals is increasing because of the flexibility offered and because in some areas, it may be the most realistic alternative. Home-based enterprises can include a great variety of full or part-time occupations such as food processing, quilting, weaving, crafts, clothing assembly, mail order processing, or assembling various goods. 23
5. Provide assistance in identifying and obtaining financing. Small businesses often have difficulty obtaining long-term bank financing for expansion because they lack assets to mortgage, cannot obtain affordable terms or rates, or cannot present a strong business plan. A business development program can identify public loan programs and package them with private loans to make projects feasible. 6. Provide assistance in undertaking joint projects such as: improved appearance; improved management of the commercial area; building renovation; preparation of design standards; joint promotions and marketing; organizing independent merchants; special activities and events; fund raising; improved customer relations; uniform hours of operation. Undertaking these projects requires cooperation, good organization, and efficient management. These projects can improve a business district's competitive position and attract new customers. The Oklahoma Main Street Program provides many good examples of towns working together for economic revitalization. The Main Street Program, developed by the National Trust for Historic Preservation, is built around the four points of organization, design, promotion, and economic restructuring. 7. Develop a one-stop permit center. There is great deal of red tape involved in starting a business including registering a name, choosing a legal form, and determining what licenses, 24
permits, or bonds are needed. Other concerns include internal revenue service requirements, unemployment insurance, sales tax permits, and state withholding taxes. Having this type of information available in one location will make life easier for potential businesses. 8. Involve active organizations and the media. Groups such as the chamber of commerce, civic clubs, etc. can encourage a healthy business climate. The local media can also support small business and aid in developing awareness of the importance of local business. 25
SUMMARY This report has presented an analysis of taxable sales trends for the city of Durant and Bryan County. The level of taxable sales in Durant has significantly increased in nominal terms since 1980. After correcting for inflation, taxable sales have increased overall since 1980. However, retail sales in FY 2010 did decrease in both real and nominal terms for Durant. This is a trend that was not only present in Durant, but also in Oklahoma and the rest of the nation. Durant s decline in retail sales was not as significant as the rest of the state; therefore, Durant experienced increases in the trade area capture and pull factor. The increased pull factor was partly due to the large decrease in state sales, but Durant also experienced a decline in population between 2009 and 2010. These coupled effects had a positive impact on the pull factor. When examining the sector-level gap coefficients, Durant experienced an increase in every sector with the exception of SIC 59 (Miscellaneous Retail, downtown stores). The most surprising increases came in eating and drinking places (SIC 58) and food stores (SIC 54). Durant attracted more than 2.4 times their local population to restaurants, and over 1.3 times their population to their grocery stores. Durant attracted well over double their population in building materials, general merchandise, and restaurant sectors. As stated earlier, state sales experienced a significant decline in FY 2010. The population decline also contributed to the increase in gap coefficients between 2009 and 2010. While Durant does attract many shoppers and continues to grow, it is important to still focus on the possibility of out-shopping to larger areas. In particular, Durant is located just miles from growing areas in Texas such as Denison and Sherman. 26
REFERENCES Barta, S.D. and M.D. Woods. Gap Analysis as a Tool for Community Economic Development. WF 917, Oklahoma Cooperative Extension Service, Oklahoma State University, <http://agweb.okstate.edu/pearl/agecon/resource/wf-917.pdf>, 2000. Harris, Thomas R. "Commercial Sector Development in Rural Communities: Trade Area Analysis." Hard Times: Communities in Transition. Western Rural Development Center, WREP 90, September 1985. Hustedde, R., R. Shatter, and G. Pulver, Community Economic Analysis: A How To Manual. Ames, Iowa. North Central Regional Center for Rural Development, 1984. Oklahoma Department of Commerce, Research and Planning Division. Population Estimates for State, Counties, and Cities, Oklahoma: April 1, 1980-July 1, 1989. December 1990. Oklahoma Tax Commission City Sales Tax Collections Returned to Cities and Towns in Fiscal, 1980 to 2010. (Fiscal Year End-June 30) Stone, K. and J.C. McConnon, Jr. "Trade Area Analysis Extension Program: A Catalyst for Community Development," Proceedings of Realizing Your Potential as an Agricultural Economist in Extension. Ithaca, New York, August 1984. Tennessee Valley Authority. "Focus on the Future," Workbook provided at RedArk Development Authority Symposium on Economic Development Leadership, Shawnee, Oklahoma, June 1986. U.S. Department of Commerce Bureau of The Census. Resident Population by County, 1990 to 2010. http://www.census.gov/populations/extimates/county/ (June 2011) U.S. Department of Commerce, Bureau of Economic Analysis. "Personal Income by Major Source and Earnings by Major Industry," Regional Economic Information System, 1980 to 2009. Woods, Mike D. Retail Sales Analysis in Oklahoma By County, 1977, 1982, 1987. Bulletin B-801, Agricultural Experiment Station, Oklahoma State University, October 1991. 27